Consolidated IYM Executive Report June 2013

PRESENTATION COVERAGE CONTENT 1.Summary Report on Compliance 2.The Overall Budget Summary - WC Province 3.Conclusion and End

SUMMARY REPORT: COMPLIANCE Overall Level of compliance on due date = 97.7% The level of compliance improve from 81.7% in July 2012 to 97.7% in June 2013 The compliance rate improved from 7 municipalities at the start of the financial year to 21 municipalities achieving full compliance in June 2013 Overall Level of compliance on due date = 97.7% The level of compliance improve from 81.7% in July 2012 to 97.7% in June 2013 The compliance rate improved from 7 municipalities at the start of the financial year to 21 municipalities achieving full compliance in June 2013

THE OVERALL SUMMARY FOR WC: OPERATING

The previous slide indicates that in aggregate municipalities realised 98% of the operating revenue and operating spending of 91.75%. Areas of low performance for operating revenue are: -Transfers recognise – operational (86.87% of R4.31 billion) -Interest Earned (82% of R294.9 million) -Fines (74.36% of R209 million) -Gains on the disposal of PPE (54.30% of million) -Cederberg, Kannaland, Swellendam, and CKD and Laingsburg realised less than 90% of total budgeted revenue which has a serious impact on the cash flow of the municipality. Areas of low performance for operating expenditure are: -Employee Related Costs – 94.72% of R11.05 bil budget, ie R583 mil under. (CoCT R472 mil) -Bulk purchases (89.01% of R8.81 billion) due to accrual accounting. -Transfers and grants (76.49% of R350 million).

OVERALL SUMMARY FOR WC: CAPITAL  Many municipalities however indicated that the capital expenditure will increase with the finalisation of the year-end procedures and outstanding transactions.  The main reason provided for the under spending of the capital budget is mainly due to delays in environmental impact assessment, procurement challenges and funding.

OVERALL SUMMARY FOR WC: CAPITAL

OVERALL SUMMARY – WC: CASH FLOWS  Aggregated Cash flows from Operations is positive at R4.49 bil (biggest from CoCT) and below the YTD budget.  Aggregated Cash flows from Investing is negative at R4.80 bil as capital payments (Capex) exceeded receipts from disposals, debtors, investments.  Cash from Financing also positive (pmnts < receipts) meaning repayment of borrowings less than new borrowings (ST or LT) and is below budget or planning. This can be attributed to most municipalities delay the take of borrowing to save finance costs.  All municipalities reported positive cash balances except 2, however some municipalities with positive balances have commitments against it (e.g. grants and creditors outstanding).

OVERALL SUMMARY - WC: DEBTORS & CREDITORS  The total outstanding debtors for more than 90 days amounts to R5.53 billion and it equates to 69.3 per cent (69.4% at the end of May 2013) of the total aggregated outstanding debtors.  Overdue Creditors are being monitored but mainly consist of disputes and queries.  An Area of concern is where muni defaulted on an arrangement with Eskom and is R15.8 million in arrears.

CONCLUSION AND WAY FORWARD The End  Oversight over Budget Implementation making good progress, established framework, work-shopped with staff, MAF, Circulars & Quarterly letters, Detailed Reviews, etc.  Compliance is improving on monthly basis however the FMR constitutes the lowest compliance rate. ( MAF, NCL’s, hands-on is paying off).  Muni’s submit progress reports on Capital Projects and also detail on overdue creditors.  Areas of concern - followed up with muni’s & progress tracked on all outstanding matters.  Hands-on support will be provided to muni’s i.t.o in-year reporting where required.  Cash Flow Monitoring remains key and the main emphasis in the current economic conditions.